"Let Me Start" tonight with this. There`s a dangerous narrative emerging
for the president in the wake of these controversies involving Benghazi,
the IRS and the Associated Press. It says he`s passive and uninterested in
governing.

In the face of the cascade of negative stories, the president seemed to
lack a response. He`s allowed the impression to emerge out there that, as
I said last night, he`s a ship with the engine turned off.

Well, "The Washington Post`s" Dana Milbank wrote the following today.
"President Passer-by needs urgently to become a participant in his
presidency. Certainly, a president can`t know what everybody in his
administration is up to, but he can take responsibility. He can fire
people. And he can call a stop to foolish acts such as wholesale snooping
into reporters` phone calls."

Dana Milbank joins me now, of course, along with Alex Wagner, who`s host of
"NOW WITH ALEX WAGNER" on MSNBC. Thank you both for this.

I think we`re all of like minds, from what I`ve heard, but let`s check our
thinking about this. Dana, is this president truly happy with the job
description of chief executive? Not senator in the White House, not
thoughtful person, not good speech maker, but someone who wants to run the
executive branch of the United States through either a deputy, a chief
executive -- chief operating officer or some span of control?

Or does he like being the guy who`s willing to play the role of putting out
fires once in a while, but really doesn`t want to be responsible day-to-day
for running the whole thing?

DANA MILBANK, "WASHINGTON POST": Well, Chris, it is sort of frustrating.
You`d think the chief executive could do more executing, the commander-in-
chief could be more commanding here. The president has shown that he`s
able to do it. He can knock heads. He got "Obama care" through by
hammering away over and over again. I don`t know why he keeps taking his
foot off the gas here.

And in terms of the scandals coming out now, look, the first rule in
scandal management is get out in front of the story. Make your case, put
the facts in the best light, get the information out. And they seem to be
doing exactly the opposite.

Finally, slowly, they`re catching up here. But somebody needs to grab him
by the lapels, if there`s anybody in that White House capable of doing
that, and shake him up.

MATTHEWS: The weird thing here, Alex -- and I know you look at politics
the way I look at it -- the weird thing is the absence of the main players.
Where was the president when Susan Rice went on "MEET THE PRESS"? Did he
call her up afterwards and say, Good work, you covered my butt, you did a
great job today? Did he talk to her before the performance?

This was her audition to be secretary of state -- of course, with Valerie
helping her and Michelle Obama rooting for her and everybody rooting for
her on that side of the White House -- and they act like they had nothing
to do with it.

Where was Hillary Clinton in prepping her for that? What is this "the
leadership," this weird, spooky language about who approved or didn`t
approve the talking points, the leadership in the building, the building
leadership. What kind of talk is that? Why don`t they say the secretary
of state, if they mean that? If not, why didn`t (ph) they use a term to
suggest that?

And also, what role did Hillary Clinton play in all this? We found out she
was on the phone to Benghazi hours after the attack, and she never said so.
It`s all this stepping back. Where was Tom Donilon, the national security
adviser? All these principals have stepped into the darkness, and that`s
why we`re reaching around like blind people trying to find out what
happened with all these nobody staffers that nobody cares about being
brought -- now we`re looking at their e-mails.

MATTHEWS: This president has faded into the woodwork, along with his top
people, it looks to me, for their convenience.

WAGNER: Let`s -- OK, first of all, Chris, I think you should be armed with
a magnifying glass and a Sherlock Holmes hat. You do have some --

MATTHEWS: Well, it ain`t complicated!

(CROSSTALK)

MATTHEWS: It ain`t complicated. It`s who`s missing?

WAGNER: -- detective work here. But we --

MATTHEWS: Who`s missing from this?

WAGNER: I think we -- we should divorce two things. I think Obama is
really interested in big legislation and big, quote, unquote, "governance."
He`s not interested in big politics. And I think the stuff like --

MATTHEWS: How about big government, the one he`s running?

WAGNER: Well, look, I`m not disagreeing that he needs to do something.
But I think there is a sense of incredulity in and around these quote,
unquote, "scandals." There is a distaste for getting --

MATTHEWS: You can call them "quote, unquote" until you`re 99 years old,
and they`re not going to make -- you`re not going to waste them away by
saying -- by dismissing them. They are.

WAGNER: Look, and I think -- I think there are going to be some lasting
legacies out of this moment. One is the relationship that the president
and the White House have with the press corps has always been contentious.
It has not been good. You see his performance at the White House
correspondents dinner. There is a sort of cold reluctance to participate
in the celebration of the press.

He has got to have a sit-down with a paper of record. It has been four
years since he has sat down with "The Washington Post" and "The Wall Street
Journal," three years since he sat down with "The New York Times."

We talk about these issues in and around national security and
whistleblowing and leaks and Benghazi and drones. Part of the reason there
isn`t a national discussion about this is because the president has been
totally reluctant to sit down with anybody and face some --

MATTHEWS: OK, but that`s not my job and I`m not the shop steward for the
White House press corps. Let me go back to Dana Milbank, back to your
point, which is a very strong point. And it`s sort of related to what
you`re saying, Alex.

But it gets to the heart of -- who is the president`s chief operating
officer? How does he run the U.S. government? I`m asking something really
fundamental we shouldn`t have to ask. Who makes sure that he kicks butt in
all the departments and makes sure everybody knows if they don`t do what he
wants, they`re gone? Who does that? I don`t think he has such a person
because I don`t think he wants that role for himself.

MILBANK: Well, Chris, if you`d have asked that question in the first term,
I would have said Rahm Emanuel. And everybody knew that you don`t cross
Rahm and -- or he`s going to -- he`s going to knock heads. And --

MATTHEWS: Then why did he leave?

MILBANK: Well, he had -- he wanted to do something important like run the
city of Chicago, but there is --

MATTHEWS: Yes, I wonder if that was the only reason.

MILBANK: There is nobody right now in a similar position who can knock
heads here. And it`s just -- the blame gets shifted further and further
down.

I just spent the whole afternoon listening to Eric Holder saying, Oh, I
don`t know. I was recused. It was my deputy. What can I tell you?

Well, you know what? He recused himself from this particular case
involving the leaks. He didn`t recuse himself from being a defender of the
Constitution and the 1st Amendment.

MILBANK: And it just seems like everybody`s just free to say and do
whatever they want, and they`re not afraid of repercussions for this coming
from the top.

MATTHEWS: You know, if you think about running a little business, a
bakery, and somebody`s stealing the donuts or something, Alex, or something
simple, use any metaphor you want -- there`s usually a boss who owns the
place. Then there`s somebody he has running it.

I don`t understand the model of this administration, weak chiefs of staff
who are afraid of other people in the White House, some undisclosed role
for Valerie Jarrett, unclear, a lot of floating power in the White House,
but no clear line of authority.

I`ve talked to people who`ve been chief of staff. They were never allowed
to fire anybody, so they weren`t really chief of staff. And I go back to
the really good chiefs of staff, like Jim Baker under Reagan. And Howard
Baker came in afterwards when Don Regan blew it. And they were in -- they
were in -- they were in power.

This president doesn`t seem like he wants to empower any other person --

WAGNER: Well, you know --

MATTHEWS: -- to speak for him or work for him. And therefore, he`s not
running the place.

WAGNER: Well, and in terms of the hiring, I mean, I think it`s fairly
strange that the chief of staff wouldn`t have hiring and firing power. And
I also think, you know, at the beginning of the administration, in the
first term, there was this sense of team of rivals. That has given way to
a team of like-minded individuals, which is --

MATTHEWS: It`s called sycophants.

WAGNER: Well, you can call it whatever you want, but I don`t think it`s
serving the president well. And I think it would behoove him to have
someone there that had a contrarian point of view, and as you said, Chris,
who could grab his shoulders and say, Listen, man, there`s a fire in the
hole, and you`ve got to do something about it.

MATTHEWS: Well, yes, except -- I`m making these points a little roughly,
but I want to get back to the point for both of you. I`ll start with you,
Alex, because you and I think politically very similarly.

And I got to tell you, this can all be fixed. The problem I`m talking
about is structural. It`s organizational. All right, everybody takes a
job and has to do parts of the job they don`t like as much as the other
parts. He obviously likes giving speeches more than he does running the
executive branch. Therefore, he has to find a way to run the executive
branch so that he can give the best speeches.

That means having a really good deputy system, where he has people that he
trusts and gives them the power to make sure what he wants done is done.
So there are solutions. We`ve seen it with Reagan, who was the most hands-
off guy in the world, ended up having -- he knew his weaknesses. He said,
I need a guy like Jim Baker in here. Nancy Reagan said that.

WAGNER: And you know, Chris, I think that the president --

MATTHEWS: Yes. You can fix these things.

WAGNER: There is some buy-in (ph) -- there is some desire to fix things.
You know, there was a lot of drum-beating around that the fact the
president had to engage with members of Congress more. And we have seen a
very concerted effort to have dinner with Republicans, congressional
Democrats and the like. That is his olive branch to the Hill.

He has to obviously move on a much, much faster timetable here and get out
in front of this issue now. I mean, this is -- to think this is going to
be brushed aside as we go into the 2014 mid-terms is a joke. This is going
to be run on. The Tea Party stuff, the IRS stuff --

MATTHEWS: OK --

WAGNER: -- is something that Republicans will milk for years, if they
can.

MATTHEWS: OK, let me go back to Dana because you have a wry sense of
humor. What part of the presidency does Obama like? He doesn`t like
dealing with other politicians. That means his own cabinet. That means
the members of the Congress, either party. He doesn`t particularly like
the press. I think that`s fair. And I don`t really care if he doesn`t
like us. I can live with that. I didn`t come here to get love by him.

And third, what part of it -- he likes to write the speeches, he likes to
rewrite what Favreau and the others wrote for the first draft. But what
part does he really like? He likes going on the road and campaigning,
visiting businesses, like he does every couple days somewhere in Ohio or
somewhere? What part does he like?

MILBANK: I think --

MATTHEWS: Because he doesn`t like lobbying for the bills he cares about.
He doesn`t like selling to the press the way most people do to get their
stories out there. Does he like actually giving orders or giving somebody
the power to give orders? No, he doesn`t seem to like to be an executive.

MILBANK: I think he likes --

MATTHEWS: What`s he like?

MILBANK: I think he likes campaigning. He likes oratory, which is
important. And he likes policy, which is actually something you might like
to have in a president --

MATTHEWS: Sure.

MILBANK: -- because he actually does care about these details and he`s
smart about these things. But you`re right, he does not have an enforcer
in there to make things happen.

And also, he doesn`t seem to have the stomach for a lot of politics. And
you know, it`s nice to be loved, but it`s -- as Machiavelli said, it`s more
important to be feared. People are just not fearing this president on
Capitol Hill right now. Part of that`s by having an enforcer in there.

MATTHEWS: How much, Alex, is this this second term thing? You know, they
talk about the sophomore slump in school, and I guess there`s a reference
point like this. And I look at all the presidents -- usually, it`s hubris
they get in trouble for. I don`t think he has hubris. I don`t think he`s
particularly arrogant. But I do think there`s something that`s different.

Do you always have people in the second term that aren`t as strong as the
first term, that you never have a Rahm in the second term? Or what are we
talking about he? I don`t know.

WAGNER: You know, I don`t know if I would -- I mean, look, Chris, I think
he came in here with a fairly ambitious agenda. We all remember the State
of the Union which was --

MATTHEWS: Sure. What`s it now?

WAGNER: -- a soaring sort of progressive vision for the country. I
think, you know, he has learned his lessons, to some degree, about how far
he can push Republicans in terms of coming to the table on something like
immigration reform and has tried to take a back seat in that process,
though it must be said this hour, an hour ago, an hour ago, he met with
Senator McCain to talk about immigration reform.

He has some landmark pieces of legislation that I think he would like to
get through. But I think his own personal distaste for Washington and his
sense that the media, the right, the sort of chattering class has been
unfair about his legislative record and accomplishments sort of makes him
want to flip the off switch sometimes and sort of just turn the lights out
in the room and say, You know what? I have done so much for this country.
Why do I need to get involved in the mud pit?

MATTHEWS: Let me tell you something. The press has generally been pro-
Obama. That`s a fact.

MATTHEWS: He`s has gotten a -- yes, well, Alex, they`re very uninformed
about the history of presidencies. This guy has probably gotten the best
press since Reagan.

Dana, don`t you think? I look at it -- you don`t have to watch Fox if you
don`t want. It`s there. But if you don`t watch Fox, you don`t watch
Limbaugh, there`s a lot of other opinion out there. I look at the major
newspapers, I look at the major networks, broadcast nets, I look at us.

MILBANK: Sure.

MATTHEWS: I don`t see a lot -- and CNN. Where`s all this antipathy
towards Obama?

MILBANK: And I support Alex`s idea. I`d love to have him give interviews
to "The Washington Post" and "The New York Times." But more importantly,
he needs to stop assaulting the 1st Amendment because there`s nothing
that`s going to turn the press against a guy --

MILBANK: -- snooping through their phone records. We all -- we all feel
very strongly about that.

MATTHEWS: Hold on, both you guys. Dana and Alex, hold on. We`re going to
go right now to Peter Alexander. He`s been inside the White House, where
he got a look at those e-mails on the Benghazi talking points. Peter, it`s
all yours.

PETER ALEXANDER, NBC CORRESPONDENT: Chris -- yes, good to visit with you
right now here. I have about 10 of those pages. There were a total of 100
documents of the Benghazi e-mails, all of which were initially provided
several months ago to Congress, according to senior administration
officials, the same ones that you have seen in pieces over the last several
days. I only have about 10 of them here because the remaining 90 are now
being faxed up to you so that we can try to examine them in further detail.

But senior administration officials in conversations with us say very
clearly, in an effort to put this controversy to rest, echoing what the
president has said, that there is no there there, that the CIA, the leaders
at the CIA, very much agreed with the assessment of the State Department
and the White House, that they were content that the final talking points
were not scrubbed down in any way, that they believe that those did
accurately demonstrate their assessment of what took place at that time on
September 11 of 2012 at the Benghazi diplomatic facility, which was
initially referred to as a consulate. That was one of the specific changes
that was referred to as "stylistic" at the time.

We saw -- we have now copies of all 12 of the talking points and the e-mail
conversations that took place behind the scenes. There are e-mails from
the CIA director at the time, David Petraeus, the deputy director, Mike
Morell. His e-mails were included, this (ph), as well, as well as those e-
mails written by some of top national security staff members at the White
House, as well as members of the State Department, too, Chris.

MATTHEWS: Well, wait a minute. Let`s get back (ph). You mean there`s
been some revision now in what we know to be the case, that Ansar Sharia,
(sic) the al Qaeda group in North Africa, was somehow erased, any reference
to that, after the initial talking points?

Just take that one. The initial version of the talking points to be used
by Susan Rice referenced Ansar Sharia, which is the al Qaeda group in North
Africa. That was taken out and the CIA think that -- says now that that
didn`t influence our information on what had happened, a lack of a
terrorist reference?

ALEXANDER: What they are saying is that the use of the word "extremists,"
according to senior administration officials, was a reference to terrorism
in some form, that they weren`t certain at that time because it continued
to have reference to those spontaneous protests that had been taking place
there.

According to senior administration officials, their assertion is that
they`re not using al Qaeda or a reference to Ansar al Sharia, which is sort
of commonly referred to as an affiliate of al Qaeda, though some people
would insist otherwise. Nonetheless, it is a terrorist organization. They
say that at that time, it was not -- they couldn`t be certain that that was
the case. They didn`t want to prejudice the investigation already being
launched by the FBI at that time. And that`s why that language wasn`t used
at the time because --

MATTHEWS: Well, wait a minute. They put it in the talking points because
they believed Ansar Sharia was involved. And then they took it out because
they put it in? This doesn`t make any sense! It was put in by the
intelligence people and then taken out by them?

And the other thing is, how come all those half dozen terrorist attacks
that were referenced in the initial talking points were also yanked out?
Are they saying now that they were kept in in some form because they
referred to them as extremist groups or something? It looks to me like it
was scrubbed. It still does.

ALEXANDER: The initial talking points, we are told by senior
administration officials, were written by the director of the Office of
Terrorism Analysis. When those initial talking points were reviewed by a
variety of people -- as they describe, this is a snapshot in time, they say
this is a process that takes place frequently, although certainly not under
circumstances like what took place on 9/11 of last year -- that when it
went through the process, among the intelligence leaders who looked at
these e-mails, it was the deputy CIA director, Mike Morell, who had
concerns that were similar to the concerns, independent of the State
Department, about the language that was being used in there. And
ultimately, that`s why the changes were made, and that the same person who
created the initial talking points, that the intelligence analysts were
comfortable with the final language of those talking points when they were
provided to Susan Rice.

MATTHEWS: Who was in charge of the talking points?

ALEXANDER: It was initially the director of the -- as I said, the director
of the Office of Terrorism Analysis at the CIA who initially was in charge
of them. And as they describe it, it was an interagency process, where
multiple individuals communicated --

MATTHEWS: No, no, no. That doesn`t make sense, though, because somebody
has to be the final word and say -- just like in a movie, who does the
final cut. Somebody has to be the editor and say, This is what we`re
putting on the air.

ALEXANDER: It had to be --

MATTHEWS: Who was the person who was the final editor? Was it the person
who the phrase "building leadership"? What the heck does that mean? Is
that a reference to Secretary Clinton or to who else? Who else is
"building leadership" at the State Department? That`s a phrase that jumps
out at anybody`s who`s political.

ALEXANDER: I think, ultimately, it was -- as we see in one of the e-mails
-- I don`t have all 100 right in front of me right now, but we know that
David Petraeus himself said that he was fine with these, I think is the
exact language that`s used there. So ultimately, he was one of the last to
sign off on them before they were provided to --

MATTHEWS: Yes, but who`s the building leadership at State?

ALEXANDER: Who`s the building leadership at State? That was Hillary
Clinton, of course, at the time.

MATTHEWS: It seems to odd to refer to a person. Let me bring in our
people (INAUDIBLE) Howard, of course, Howard Fineman, joins us now from the
HuffingtonPost, and Mike Isikoff, the chief investigative reporter for NBC
News.

Gentlemen, have at it. He`s seen this stuff. You haven`t. Howard.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Well, my first thought is that the administration, oddly, enough would
rather talk about Benghazi now than either the IRS or the AP. So they`re
dealing with this first off because I think they think they`re on the
strongest ground with this --

MATTHEWS: OK --

FINEMAN: -- because their argument is that there was finally agreement,
that everybody did sign off on what they did finally. And whatever the
director of the Office of Terror Analysis said initially to get the ball
rolling, everybody in the end -- Petraeus, Hillary Clinton, Ben Rosen (ph),
perhaps other officials in the White House -- all agreed on what Susan Rice
eventually said, and that the changes that were made were made for
legitimate reasons.

That`s their argument. That`s why they`re putting this stuff out.

MATTHEWS: Yes.

FINEMAN: There`s a lot of other things they don`t want to put out. But
right now, on this day in the middle of the sort of triple witching hour
that we`ve got going on, they`re putting this stuff out because, arguably,
this is the easiest of the three fires for them to deal with.

MATTHEWS: It seems, Michael, that those who are skeptical about even this
latest revelation, these papers being throwing at us and 100 -- by the way,
throwing 100 sheets of paper at us at 5:00 o`clock at night is to me highly
suspicious. It looks like they don`t want a lot of investigation of these
papers between now and filing time tonight.

MICHAEL ISIKOFF, NBC CORRESPONDENT: Well, it is remarkable, if I heard
Peter correctly, that there are 100 e-mails about these talking points. I
mean, it does tell you something about when you have government by
committee and everybody weighing in on what ultimately was, you know, a
couple of paragraphs by Susan Rice, you`re going to get this kind of mish-
mosh.

Look, I`m at a bit of a handicap because we haven`t actually seen it yet.

MATTHEWS: Yes.

ISIKOFF: The one thing that strikes me is this is something they probably
should have done months ago, could have done months ago. Why they had to
wait this long is --

MATTHEWS: Well, the Republican contention -- let`s do it in broad strokes
-- was that the government of this administration was concerned that this
looked like terrorism right before the election and they were trying to
squash any notion we still faced a major terrorist threat, especially from
an al Qaeda organization.

And that fits still within the way we`re getting this information.

FINEMAN: Well --

MATTHEWS: It still fits what we`re seeing. They`ve all agreed to play
down this group. They`ve all agreed to do this. But who was agreeing to
who? Who was really fighting it?

FINEMAN: Well, I think --

MATTHEWS: Somebody could have said to State, OK, you really don`t want
this done, so we won`t do it.

FINEMAN: One little preliminary detail to the release of these 100 e-mails
is that there`s some question about one of the e-mails from Ben Rhodes, the
speech writer turned foreign policy analyst in the White House, that may
have been misinterpreted by one news organization.

FINEMAN: It`s not as damning as it might have been. So they`re thinking
that the White House maybe -- Well, let`s put all the rest of these out so
people can see that this was an honest discussion and nobody was talking
about, Well, how would this affect the campaign.

But don`t remember -- don`t forget that this did take place in the middle
of the presidential campaign, that one of the president`s key arguments was
that he had vanquished al Qaeda. It would have been inconvenient
politically, to say the least, for there suddenly to be an al Qaeda flare-
up in Libya, which there were questions about whether we should have been
involved in from the beginning.

So I think there was certainly a surround of political interest.

MATTHEWS: And, by the way, I watched that "Meet the Press."

FINEMAN: Right.

MATTHEWS: This isn`t something foreign to me.

I thought Susan Rice did a bang-up job. In fact, after it was over, I
said, she`s just pretty much nailed down the secretary of state job. She`s
defended the administration. She did it with great power and -- and
authority.

FINEMAN: Right.

MATTHEWS: It was a compelling case she made. I would assume that after
she made that performance, she got calls from everybody, including the
president, saying, good work. And that`s what`s so ironic about this.

FINEMAN: And then three days later, they told a different story on the
Hill.

And I would say one other thing. Go back to the videotape of the president
on Monday. He said -- he said at the beginning of his press conference,
well, we acknowledged at the beginning that this was terrorism.

MATTHEWS: So subtly that Mitt Romney and his entire campaign missed it.

FINEMAN: No, no, but what -- I know. But my ears perked up at the word
acknowledged.

MATTHEWS: Yes.

FINEMAN: He`s saying, hey, wait a minute. We acknowledged this at the
beginning.

MATTHEWS: Yes.

FINEMAN: Think back. Why would he use -- would he -- I know it may sound
picayune, but why would he use that word?

ISIKOFF: But what has come out is what -- inevitably, it`s not what you
think it is. What we saw was this bureaucratic clash between the CIA and
the State Department over whether the CIA was trying to --

(CROSSTALK)

MATTHEWS: Let me ask you a question about the way the government works.

(CROSSTALK)

ISIKOFF: -- told you there were terrorism warnings.

(CROSSTALK)

MATTHEWS: Why wasn`t -- why was this done by staff? Why wasn`t the
national security adviser, Tom Donilon, great political mind -- he knows
exactly what we`re talking about and why we`re talking about it -- he could
have solved all these problems and done it his way.

Why wasn`t he on the phone with Hillary Clinton knocking out the language?
Why were those 100 e-mails going back and forth? Why weren`t the
principals involved? Or were they involved on separate phone calls from
the they were using as their surrogates?

ISIKOFF: Well, it is pretty interesting that we have all these e-mails

(CROSSTALK)

MATTHEWS: You don`t think Hillary Clinton cared about how this was being
described? You don`t think Donilon wanted it described the right way, his
way?

Don`t you think they were involved? And yet all this discussion is about
somebody named Victoria Nuland. Why that?

(CROSSTALK)

ISIKOFF: Yes. Well, it will be interesting to see the blind copies on the
e-mails, if they reveal those.

(CROSSTALK)

MATTHEWS: I just find it`s one of these cases, Howard, of politics where
they know what they have done.

FINEMAN: Well --

MATTHEWS: The president was watching Susan Rice basically audition for the
job of secretary of state that Sunday. I`m sure he was glowing in his
support for her before and after. And then all of a sudden, the whole
thing came apart. I think that`s why he`s so angry about this issue.

I think he`s angry at the press and at the right because of somehow
bringing down his choice initially for secretary of state, his wife`s
choice, Valerie Jarrett`s choice. We know all this. It`s all public
information.

FINEMAN: Well, you remember -- you remember when we said at one point, the
president said, when people are attacking Susan Rice --

MATTHEWS: They`re attacking me.

FINEMAN: He said, if you have got a problem, don`t attack her. Attack me.
Come after me.

This is a strange way to put out the story. We always talk about Friday
nights being the garbage dump.

ISIKOFF: Yes. Yes.

MATTHEWS: The president is going to be coming out at 6:00 tonight with a
statement on IRS, the IRS, and what was discipline action taken apparently
against two officials over there at the IRS, under the leadership, perhaps,
of Jack Lew over there who is the secretary of Treasury.

Somebody did -- so here`s the president trying to clear the deck in one
night. He`s going to do Benghazi. He did it at 5:00. And he`s going to
do the IRS at 6:00. This may be too much the bum`s rush here.

FINEMAN: No, but what I`m saying is they put out these e-mails because
they would rather be thought of as a White House full of institutional
infighting, which is what they`re advertising here --

MATTHEWS: I see.

FINEMAN: -- than one that was nefariously trying to twist the truth in
an election.

MATTHEWS: My God.

ISIKOFF: And if they had stayed true to their pledge of transparency, they
would have put this out a long time ago and a lot of this would have been
an old story by now.

MATTHEWS: So, in the end, I want to get back to a conversation I began
tonight. You are pros.

How does this all come to be, this firestorm of Benghazi and IRS and FBI
investigations on the Associated Press? I call it the T.P., talking
points, the -- what`s the other group called, the --

ISIKOFF: Patriots?

MATTHEWS: Patriots, the Patriots and Tea Party people, another T.P., and
the APs. You have the T.P. two and the AP. How does this all come
together? What does it say about our administration here, this government?

FINEMAN: Well, I -- I think it`s -- I think it`s coincidence, except for
the fact that what happens is, in an election, some things that you would
otherwise look at, you don`t look at because it`s in election.

Paradoxically, the time when you should be looking, during the campaign,
you don`t, because everybody says, oh, that`s just politics.

FINEMAN: Then, after the election season, that`s when things that you
didn`t focus on enough during the campaign get focused on.

If you had -- if this Tea Party story had emerged during the midst of the
campaign, that would have been interesting, but it would have been
politics, not investigation.

ISIKOFF: Well, actually -- but the legs, I think, to the IRS story, is it
did come up during the campaign. They -- it came up last year.

FINEMAN: Right.

ISIKOFF: All these Tea Party groups were writing Republican members of
Congress, who wrote letters to the IRS, saying, what`s going on here,
getting back all these answers from high-level officials at the IRS that
don`t provide a whiff of this.

(CROSSTALK)

ISIKOFF: And I think where this is going to go is, why didn`t -- why did
you cover this up? Why didn`t you disclose when we wrote you letters?
What`s going on here? You didn`t tell us you had a problem of this -- of
this nature.

ISIKOFF: They decided they didn`t want to do it that way. And I think
that`s what`s disturbing to a lot of people.

MATTHEWS: Well, the president has rattled the cage of a lot of people this
week. He`s rattled the cage of the right on the Tea Party. He`s rattled
the cage of everybody in the Republican Party on the talking points. And
now he`s going after Associated Press, the one news organization that
everybody in our business needs and uses and every newspaper and radio
station in the country.

Thank you, Howard Fineman.

And, thank you, Michael Isikoff.

I`m sure I will see you later this evening.

Up next, some big questions remain, of course, about the IRS scandal. The
biggest, will the scandal stick? And, of course, that question we just
heard, did the top people over there cover it up when they were asked about
it by members of Congress?

By the way, President Obama will, as I said, make a statement tonight at
6:00 Eastern, coming up in a half-hour right now, on this network, as well
as other networks. But this is the place to watch.

Cisco shares are rallying after-hours. The company`s quarterly earnings
and revenue were better than forecast. Meanwhile, Google launched its own
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time ever.

And homebuilder sentiment rose in May as home prices soared.

That`s it from CNBC, first in business worldwide -- now back to HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Breaking news tonight: The president plans to make a statement, a national
statement on the IRS scandal at the top of the hour. That`s 6:00 Eastern
time. Earlier this afternoon, we learned a senior IRS official has told
congressional officials that two Cincinnati employees in the IRS have been
-- quote -- "disciplined" -- close quote -- for singling out Tea Party and
conservative groups applying for tax exemption, though we don`t know what
that discipline entails.

This comes in the wake of tough front-page stories on the IRS scandal today
detailing findings of bad practices and bad management.

Well, look, some news here. The president called these issues intolerable
and inexcusable. Perhaps the most damning headline came from "USA Today."
I saw it. It popped out at me. Look at it. There it is. "IRS Gave a
Pass to Liberals."

And that`s the heart of why this story probably has legs, and not just on
the right -- quote -- "In the 27 months that the Internal Revenue Service
put a hold on all Tea Party applications for nonprofit status" -- this is
from the "USA Today" headline story -- "it approved applications from
similar liberal groups, a `USA Today` review of IRS data shows. Anyway, as
applications from conservative groups sat in limbo, groups with obviously
liberal names were approved in as little as nine months, with names
including words like progress or progressive. These groups applied for the
same tax status and were engaged in the same kinds of activities as the
conservative groups."

Well, Dan Rather is anchor of "Dan Rather Reports" on AXS TV network, and
David Corn is an MSNBC political analyst and the Washington bureau chief
for "Mother Jones."

Dan Rather, it`s an honor to have you on. This story, how would you gauge
it in mega-tonnage, the fact that the IRS was playing favorites,
apparently?

DAN RATHER, HOST, "DAN RATHER REPORTS": Well, on a 10 scale, it`s
somewhere between a six and seven and has the potential of going higher.

No question this will have more legs. Whatever the president does tonight,
however decisive he appears to be, this isn`t going to end it. The
question gets down to who knew what when how high up in the Obama
administration.

I wouldn`t be surprised, Chris, to see eventually a special prosecutor
named in this case, an independent prosecutor to look into the case. This
is serious. The Republicans, from their own partisan political standpoint,
they can look like a deacon with four aces here --

MATTHEWS: Yes.

RATHER: -- because of the way this is playing out.

But this is trouble with a capital T. for the president. It would be a
mistake to underestimate it.

MATTHEWS: My question -- and this is always good to try to do this, no
matter what our points of view are when we get into editorializing around
here.

Suppose we found out the IRS under those blokes was going in and
systematically denying tax breaks to all the groups that -- the progressive
groups -- call them the good guy groups -- and systemically giving a pass
to every one of the right-wing groups.

CORN: Right.

MATTHEWS: Would you assume that Cheney and Scooter and that whole crowd
didn`t get their fingers somewhere into the IRS?

CORN: Well, we --

MATTHEWS: You wouldn`t assume it.

CORN: Well --

MATTHEWS: You would want an investigation.

CORN: We do know that the Bush-Cheney administration -- I will say it in
the official order -- did target the NAACP.

MATTHEWS: And what was the discipline taken then, disciplinary action?

CORN: I don`t know remember who got burned for that.

MATTHEWS: They went after Julian Bond at one point.

CORN: Yes, when he was at the NAACP.

And the "USA Today" piece said that the IRS gave liberals a pass. It
didn`t give liberals a pass. It took nine months, 12 months. It was a
shorter period. They treated them differently. That is true. But it
wasn`t like --

(CROSSTALK)

MATTHEWS: Back to my point. Suppose you discovered this was a reverse
case under a right-wing administration.

CORN: Well, you would want an investigation. But we have had one
investigation already.

CORN: The inspector general of the Treasury Department said in the report
that came out a couple days ago, he said that there was no evidence that he
found of outside intervention from the IRS. So that means the White House
wasn`t involved.

(CROSSTALK)

MATTHEWS: I believe Carney said that the other day, by the way,
authoritatively.

CORN: Yes. That`s the big question here.

MATTHEWS: Dan, let me -- let`s just a look at this. Here`s the politics
end of this.

House Speaker John Boehner today said he wants more than just resignations.
Let`s take a listen to what Boehner has to say. He is loaded for bear
here.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The IRS has admitted to
targeting conservatives, even if the White House continues to be stuck on
the word if. Now, my question isn`t about who`s going to resign. My
question is, who`s going to jail over this scandal?

(END VIDEO CLIP)

MATTHEWS: OK. There you have it, Dan Rather. And you got jail time
talking about -- Boehner there looks like this is his ticket to ride to
unite the Republican Party center-right all the way to extreme right. They
all agree they hate taxes, hate the IRS, hate Obama. Here`s the chance to
put them all in a happy, happy, what do you call it, mystery tour.

They may know what -- what anybody did wrong, but they want to nail them
and hang them and put them in prison.

RATHER: Well, exactly. You`re going to hear a lot of this, Chris, because
this is a three-way win for Boehner and for the Republican Party in ways
it`s been handed to them.

Number one, they can continue to block any real progress made by President
Obama in his second term. That`s a good deal of what all Benghazi and this
are about. Secondarily, it gives them a chance to reunite with the Tea
Partiers. They were worried about the 2014 elections because they were --
had been estranged from the Tea Party -- now the solidarity with the Tea
Party.

And the third thing, of course, by the way, they also touch up chances for
Hillary Clinton to run in the next presidential election. So it`s a three-
way win for the president.

MATTHEWS: Yes.

RATHER: There will be a lot more of this rhetoric about, listen, it isn`t
just a case of resignations. We want people going to jail. And that`s
going to have some resonance. It will go for a while.

MATTHEWS: You know, there`s two different questions here. And we get them
confused. And I think the president does, too.

It`s not whether he`s responsible. Did somebody in the White House call
somebody in the IRS and say tag-team, go after these right-wingers? It`s,
in effect, if anybody in the government does something that`s political,
especially tainting left, the president`s got to deal with it.

CORN: Yes.

MATTHEWS: So, the smart president sends the word out there ahead of time,
you know, I`m playing it straight.

CORN: Yes.

MATTHEWS: I want to win. You know my politics. But I`m playing it
straight.

MATTHEWS: This, by the way, feeds into all the right-wing paranoia about
the IRS.

CORN: I know.

But it comes because of the paranoia, the true paranoia about what Richard
Nixon did --

MATTHEWS: Yes.

CORN: -- with the IRS when he put people like Dan Rather on the enemies
list.

MATTHEWS: I know.

CORN: So, he`s hamstrung.

But that doesn`t mean that, rhetorically, he can`t take the lead. But all
day today, I got tweets from Marco Rubio demanding an investigation. This
is after Eric Holder already announced a criminal investigation. The right
wing will keep saying we want more, we want more of an investigation, no
matter what the president does.

MATTHEWS: OK. Here`s my -- can I -- I`m trying to be -- I`m trying to be
a typical citizen on this, not a prisoner of Washington and the Beltway and
New York and all that.

MATTHEWS: If I`m making out 50 a year or 40 a year, and I`m running a
small business, I`m lucky enough to run a real small one, or in some
management position, I don`t like taxes, because they take a chunk of my
income.

I see my full paycheck. Then I see what`s left of it. I don`t like the
IRS to start with. I don`t like them. And then I think, well, I don`t
like them, but at least they`re roughly fair because I know what the tax
rates are and the rich have to pay a lot more percentage-wise and I can
live with that. But now, it`s almost like my church, when you find out
about the priests messing around with their weird stuff, and you go, wait a
minute, I didn`t mind the church telling me they`re better than me, but
when I find out there was all hypocrisy in a lot of these cases, that there
really are bad people, bad apples, I go -- all right, I`ll pay my taxes,
but maybe I won`t be quite as clean as I was last year.

I`m just wondering, the attitude of people. They`ll feel like a chump.
That`s the scary part about the IRS. It gives license to people already
inclined not to pay ball with our country.

RATHER: And bingo. That`s the reason this is so dangerous for President
Obama and his administration. This is turning out to be the "Little Shop
of Horrors" for him, which is to say he tries to get in front of it, the
more he tries to deal with it, the greater it grows.

This has real legs, as you said at the opening, Chris. It`ll be very
interesting to see where it goes. I`ll be surprised if we don`t wind up
with many calls to have an independent special investigation.

MATTHEWS: Dan, you know what -- you know why Nixon never came clean,
because he knew so much of it. He had ordered the breaking in of
Brookings. He had all these things, all those guys, like Ehrlichman,
Haldeman, all his henchmen, knew so much on him he couldn`t even give away
the burglary and say I didn`t order that if he didn`t, because he had so
much stuff. Like Fibber McGee`s closet, that go way back. He had so much
crap that if any of it got out, he`d be gone.

But Obama, I think he`s clean. What has been his hesitance to put this
behind him? It`s the old question. When in doubt, put it out. Why is he
taking so much time to put it out?

RATHER: Well, because I think he and those around him feared that what
might happen is exactly what is happening. You put your finger on it.

He talked about transparency in his first presidential campaign and the
second campaign. But they haven`t been that transparent. If they were
transparent about this from the beginning, they`d be in much better shape
now than they are.

But the answer to your question whether you`re Republican, Democrat,
Mugwump, whatever, it`s in the nature of politicians when there`s bad news,
they want to cover up the bad news. And also, they have the belief that
they actually can cover it up. And on both instances, of course, they`re
wrong.

MATTHEWS: Well, thanks to guys like you, David, we`re learning a lot about
what goes on in the back room.

DAVID CORN, MOTHER JONES: Yes, yes.

MATTHEWS: The way they talk, the way they cover -- the way they attack and
ridicule the 47 percent. The way people are in politics.

CORN: I don`t think this is an effort on the part of the White House to
cover up anything.

MATTHEWS: I don`t think the president did anything wrong here.

CORN: I think they were blindsided. I don`t see any evidence this is a
White House scandal yet.

MATTHEWS: Which one of the three gets to him? The only one that gets to
him, I would say, is Holder, who`s a close compadre of his, who recused
himself.

CORN: He recused him.

MATTHEWS: But even then, the fact that his Justice Department is going
after reporters, that`s the only one that gets him, I think.

CORN: Which I doubt when the Pew Poll comes out next week, whenever it
comes out, I don`t think a lot of Americans are sitting there wringing
their hands over "The A.P." for good or bad. They want to see jobs and
other things.

CORN: No, no, no. In terms of wrong, you and I and the press have our
reasons for saying it was wrong. This is something that deserves
attention.

MATTHEWS: I see no evidence he had anything to do with the IRS.

By the way, on Benghazi, I think it`s all about intramurals worrying about
what Michelle Obama thinks, what Valerie Jarrett thinks, what Tom Donilon
thinks, what Hillary Clinton.

There`s so many personalities in this with their own sensitivities, just
like clearing those talking points. They had to get something everybody
agreed on. And now, everybody`s being tagged for this.

CORN: Well, one problem I think the White House has, it just may be a
product of the 24/7, pseudo (ph) nanosecond world that we live in, that
everything becomes goes from zero to 10. Nothing`s in between.
Republicans get out there and try to turn everything into a gate because
they`re just throwing things up against the wall, hoping one thing sticks
and they don`t have to deal with immigration reform, right?

MATTHEWS: What would you rather deal with?

CORN: If I was John Boehner, I know what I`d rather deal with, yes.

MATTHEWS: Anyway, sometimes 10 is more fun than six.

Dan, you say six to seven for IRS, we`ll see if the thermometer rises.
Thanks so much for your guidance here.

Again, President Obama is expected again to make that statement on the
scandal of the IRS, the one I think he has nothing to do with, coming up at
6:00 Eastern.

We`ll be right back.

Interesting, the one --

(COMMERCIAL BREAK)

MATTHEWS: Well, guess what? Mark Sanford is the newest member of the
United States Congress. Congressman Sanford was sworn in late today.
There it is on the House floor. He looks like he`s having fun.
(INAUDIBLE)

Anyway, by the way, political comeback is under way for Sanford. The
former Republican governor of South Carolina which he was, he went missing
while in office to be with his Argentinian mistress, or Argentine mistress.

Sanford defeated Democrat Elizabeth Colbert-Busch by nine points in a
special election just last week. It seems like old news already, doesn`t
it?

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Well, we`ve got a big news making event coming up at 6:00.
We`re looking at the White House briefing room. The president is going to
enter that room and make a statement at the IRS scandal coming up the top
of the hour, that`s 6:00 Eastern.

Of course, we think it has something to do with disciplinary measures taken
against those people who apparently violated the rules of the IRS. We`re
going to know very soon.

"Mother Jones" Washington bureau chief David Corn is back with us, along
with "The Huffington Post" director of news and all great things, Howard
Fineman, and NBC News top investigative -- we`ve got three great people.
You`ve all got a point here.

You are looking, Howard, let`s start with you. This is --

(CROSSTALK)

MATTHEWS: Looking right up the wire. This is like a treasure-trove of
stuff on these e-mails that have just been handed out to the press.

HOWARD FINEMAN, THE HUFFINGTON POST: Well, one thing that comes up right
away, Chris, if I can --

MATTHEWS: Sure.

(CROSSTALK)

FINEMAN: No, just to jump in on this. It is clear as you start reading
through this that even though the director of terrorism investigation for
the CIA said, hey, let`s put -- let`s put al Qaeda in here in these talking
points. The general counsel says -- of the CIA says I know we`re in a
hurry to get this out but we need to hold off long enough to ascertain
whether or not providing that kind of information conflicts with
instruction from the FBI and the Department of Justice in light of the
criminal investigation.

FINEMAN: If it wasn`t, it could become one. We are not to generate
statements with assessments as to who did this, even internally, and
certainly not to mention in public release.

So, now, this is a CIA guy. He is not a political guy. He is not some guy
in the White House saying, hey, wait a minute, we don`t wanted this.

This is the CIA general counsel.

MATTHEWS: But did he say don`t call it a terrorist attack? Does he ever
say that?

FINEMAN: Well, he doesn`t say in so many words, but that`s clearly the
import of what he said.

(CROSSTALK)

MATTHEWS: Why wasn`t it called a terrorist attack from day one?

MICHAEL ISIKOFF, NBC NEWS INVESTIGATIVE CORRESPONDENT: You know, the
language is pretty stark. It says we know extremists with ties to A.Q.
participated in the attack. Which complies complicity -- which implies
complicity in the deaths of the American officers.

FINEMAN: But that`s from this guy who is the director of terrorism
analysis.

ISIKOFF: That`s pretty stark.

CORN: Before it was drafted by the analysts, the talking points were
drafted by analysts who said, this is the best information we have now.
But when it comes to what you`re going to put out publicly, that`s a
different type of question, because the general counsel has a concern.
They`re going after the prosecutions. We may not want to tip them off as
David Petraeus has testified.

But as we go through these 100 pages of emails, what we`re seeing doesn`t
support the GOP theory of the case.

MATTHEWS: Nothing so far can be used by that.

CORN: Which is the White House saying, oh, my God, we`ve got to tamp this
down to help Obama win the election.

MATTHEWS: So, you think this is smart to put this --

FINEMAN: Well, there`s no question they took out in the editing process,
there`s obviously no question. Nobody disagrees that they took out
references to al Qaeda, et cetera.

The question is why did they do it?

CORN: Yes.

FINEMAN: The thing that I just read from the general counsel says, that`s
because the DOJ, the Department of Justice, the FBI who are going to handle
the investigation, don`t want us saying anything publicly or even
internally.

MATTHEWS: OK, let`s take a middle case. They didn`t want to mention al
Qaeda, they didn`t want to mention the previous attacks. But why did they
continue to say through the mouth of Susan Rice on "Meet the Press", that
it was basically a demonstration that evolved into a terrorist attack, or
into an attack? Why are they still trying to play down it was terrorism?

CORN: I talked to someone who`s involved in the drafting of the talking
points earlier today, and the explanation is that we still didn`t clearly
know there was conflicting information --

CORN: What happened was, the attacks did happen after the attacks on
Cairo. Remember, people forget about this. The attacks on the Cairo
embassy were real. There were like, a dozen other embassies that were
attacked at the same time, and it was only after those attacks.

And the operating assumption of some people involved in this was the guys
in Benghazi saw what was happening in Cairo and elsewhere and said, hey,
now is our time. Round up the boys.

And so, it did kind of merge together a couple days after the fact.
They`re still trying to sort it out. It doesn`t seem to me to be -- even
if they got it wrong, you don`t see any guilty intent.

MATTHEWS: Was there any demonstration at the Benghazi facility that
preceded the terrorist attack?

CORN: Apparently not.

MATTHEWS: But they say there was.

CORN: Well, they got that wrong.

MATTHEWS: After all this 100 e-mails, they got that wrong?

FINEMAN: Hundred pages of emails.

MATTHEWS: Hundred pages of e-mails, they got that wrong that fundamental --
Michael, that fundamental fact that it was not a demonstration that evolved
into an attack. It was an attack.

ISIKOFF: It doesn`t speak well for the intelligence community and what
they knew and what their assets were.

We`ve only got a few minutes before the president takes that podium there
to explain what actions have been taken in the last 24 hours to deal with
the infractions, I think the president will call them, at the Internal
Revenue Service and what he`s done about them. Will the heads have rolled
truly enough to satisfy public anger or not?

Joining me right now, of course, are David Corn, Howard Fineman and Mike
Isikoff, all looking into these papers just released by the White House to
deal with these e-mails that were all put together by various agencies of
the government to try to explain what should be explained about that attack
on our facility in Benghazi back several weeks before the election last
year, and still trying to figure that out.

Has anybody come up with something we ought to know? We`ve got a minute
here.

CORN: I find it really interesting that in one of the later iterations,
you have the CIA in their version of the talking points still talking about
a violent demonstration with Islamic extremists being part of it. So, the
whole notion that there was -- whether it was wrong or not -- but the idea
of blaming it on a demonstration that the White House was doing this to get
away from calling it terrorism, it`s not the White House introducing
demonstration into these talking points. It is the CIA. They were wrong.

MATTHEWS: Will it (ph) shut down the Republican call for action here?

CORN: Of course not. They still find a way to make this impeachable.

MATTHEWS: What will they find here?

CORN: I think there, they`re not going to find anything here, but they`ll
say we don`t have all the information and they`ll keep coming one reasons.

MATTHEWS: Let`s try to remember why we`re talking about this. The
Republican Party believed they were somehow gypped out of winning the
election.

MATTHEWS: I know it is a strong statement them got a bad call because the
president and his people decided to cover up a terrorist attack and make it
look like the president had things under control in terms of national
security. They say if we had known the full reality of Benghazi, it was a
terrorist attack against an undefended facility, Obama would have looked so
weak and so incompetent he might have lost the election.

FINEMAN: Well, no, this --

MATTHEWS: Remember the debate.

FINEMAN: Yes, I know. But nothing I`ve read here so far would support
that theory. As a matter of fact, and I haven`t gotten to the higher-ups
in the CIA in this e-mail chain yet. But when the general counsel says,
hey, wait a minute, we shouldn`t be mentioning al Qaeda here. He is
presumably not doing that for political reasons.

MATTHEWS: OK. Got to go right now.

David Corn, Howard Fineman, Mike Isikoff, right now, the president is just
minutes away.

"POLITICS NATION" with Al Sharpton starts right now.

END

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